New Venture Creation: Starbucks - Case Study Example

New Venture Creation: Starbucks Table of Contents Introduction 3 Product or Service Being Offered 3 Comparison of the Product/ Service with that of the Competitors 4 Supply of Products or Services to the Customers 5 Market Analysis 6 Competitive Landscape and the Attainment of Share Market 7 Financial Implications 8 Conclusion 9 References 10 Bibliography 12 12 12 12 Introduction The creation of a new venture is often viewed as a planned module of expanding an existing business or setting up of a new business unit. The creation of a new venture requires certain aspects to be taken into concern that comprise identification of the business plan, analyse the market wherein the new venture would be set up and complete analysis of other related market factors (Goossen, n.d.). Similarly, this essay is prepared to analyse the business idea along with integrating those ideas into a concrete business statement for a particular company i.e. Starbucks Coffee Company. Since its establishment in the year 1971, Starbucks is renowned as the roaster and the retailer of ground coffee, tea and whole beans of coffee. The company has been serving its coffee in almost 60 countries and with almost 17,000 stores throughout the globe (Starbucks Coffee Company, 2011). Now, in order to develop its business and creation of a new venture, a newer business plan would be proposed to the company along with analysing the current market scenario and the costs required towards effective implementation of the plan. Product or Service Being Offered Starbucks is planning to develop and implement a newer idea in order to add greater value in its existing business and serve customers with more variety of products and services. The business idea is to add vending machines of coffee at public areas in campuses like libraries and places of accommodation of the students. The prime cause behind this business idea is that the students can enjoy the taste of Starbucks coffee any time and at any place. It will be a better idea for both the company and its potential customers especially the students. From the viewpoint of the students, it can be stated that they can enjoy coffee at a very low range of price. Conversely, from the perspective of the company, it will be much convenient and cost-effective, as it would not require paying the extra charge for the store and for the staff members of the company delivering such services. One of the major aspects of the business idea is to serve the customers with the traditional speciality items who belong to various nations or cultures. Besides cakes and muffins, the business idea takes into concern serving special traditional items so that the customers visiting from any country can avail the quality services of the company. Comparison of the Product/ Service with that of the Competitors In the preparation of this business idea, numerous aspects can be apparently observed to add greater value to the idea along with providing unique features to it. Often, it is viewed that the small retailers of coffee possess the idea of adding vending machines in the public areas. This method of vending machine is often recognised as one of the cheapest methods of marketing or promoting such products (Chandon & Wansink, 2012). However, in the case of Starbucks, one of its biggest ‘unique selling point’ (USP) is the bigger international brand, which it possesses in the business markets where it operates. The students will be able to avail the services and products of such a larger brand in a cost effective manner. The efficiency of cost prevails, as the students need not to pay the additional charge such as the charge for store and staff service. The other positive aspect of the idea is that the students can enjoy the taste of coffee of such a huge brand along with keeping the hygiene factors into mind. It signifies that Starbucks always prioritise maintaining the hygiene and the cleanliness factor in its broad assortment of products. Apart from this, the other beneficial factor of this business idea is that through adding the vending machines at public areas such as in colleges, the company can attain the opportunity of gaining huge volume of employees. This can be justified with reference to the fact that along with serving coffee in a cost-effective price, Starbucks can also offer job opportunities to the students of the colleges. Thus, the aforementioned services can be termed as the USP’s of this business idea. These USP’s can also be regarded as one of the aspects, which would make the company quite different from its competitors such as Tully’s Coffee Corporation, Diedrich Coffee, Inc., Dunkin Brands, Inc. and Peet’s Coffee & Tea Inc. among others. Identifiably, all these brands have always served their customers with better products in their store and with all comforts (Kenneth, 2007). However, the major unique facet of Starbucks lie in the point that being a huge brand, it is opting for setting up a new business idea of adding vending machines in the public areas such as in the colleges. This USP will definitely make Starbucks different from its competitors. Supply of Products or Services to the Customers The business idea of Starbucks is to add vending machines in the public areas such as in the colleges and serving the students belonging to those colleges with special traditional items and reasonable price. In relation to this business idea, the company might plan to open up canteens in the respective college premises in order to supply the product or the service to the customers. Regarding the supply of special traditional items to the customers, these can be served at the existing stores of Starbucks. In the stores and the college premises, the varied range of customers can have the pleasure of consuming wide array of foods under a single roof. Thus, it can be stated that the main source through which the customers will be served with the products and services are its stores and canteens formed in the college premises. Market Analysis Market analysis is regarded as one of the major parts of the planning and development of a business plan or idea. The analysis of an available business market and targeted customers are the main constituents that ought to be taken into concern while implementing a newer business strategy or plan. In the context of the business idea developed by Starbucks of adding vending machines at public places such as in the colleges, it can be stated that the major group of customers would be the college students. The colleges or the educational institutes can also be termed as the available market for the execution of the business plan. This particular group of students have been chosen as the targeted customers for the business idea due to the reason that there lays a huge popularity of having drinks and beverages amid the youngsters (Chester & et. al., 2007). They will prefer to buy from the college stores of Starbucks due to a major reason that they do not require to provide extra charge from availing the services that offer by the staff in the stores. Moreover, they can also avail quality food items of such a huge brand at low price rate. The other reason for the targeted customers to buy the products is that they can avail quality products and services of an international brand, which would aid them in preserving their health along with hygiene after having the quality foods of the company. It has been discussed in the earlier section that none of the major huge brands have intended towards targeting their customers as the college students by adding vending machines in the college premises. In the context of setting up of new business idea for Starbucks, it can be apparently observed that there exists a high demand for college canteens in the UK. The college students are served with breakfast and several beverages such as coffee, tea and other food items in the canteens that are already existed in the UK business market. Apart from these items, it has also been viewed that there is a high demand for beverages and confectionary items in the colleges and also the other places of the UK. The students often desire for a place where they can spend their leisure time along with having healthy foods and drinks. A few of the retailers are serving the college canteens with breakfast facilities (Department of Education and Early childhood Development, n.d.). Hence, in this matter, it can be ascertained that Starbucks can attain success in setting up vending machines in the UK business market, as only small and minimum retailers of coffee have been operating in the college premises. Competitive Landscape and the Attainment of Share Market With the implementation of the business idea i.e. adding vending machines in the colleges, it is believed that Starbucks can attain high competitive position in the market. Unlike, its other competitors, it can cover major portion of the market share by providing special services to its targeted customers. As the business idea will operate in the retail industry, it is anticipated that the company will face certain critical challenges like business market competition. However, it is believed that with proper and adequate implementation of the business idea, it can add a unique feature to the company. The business idea of serving the customers with certain traditional specialities apart from cakes and muffins will certainly gain the attractiveness of the special group of customers at large. The competitors of Starbucks has always been targeting the young generation for its special products of coffee and other confectionaries (Starbucks Coffee, 2002). But, in case of Starbucks, it has been targeting all age group people and also varied cultural people for the implementation of this business idea. The other aspect, through which the competitive advantage of Starbucks can be assessed, is that the customers or the students will be served with selected music and unique design coffee mugs (Solis, 2013). Apart from this, the company will also keep constant track of how its products will be best suited in the community they are serving. All these efforts of the company will definitely help it to attain superior competitive position. It would not only attract the college students with the availability of proper food and other amusements such as music but also keeping into concern their health along with hygiene. These major aspects would certainly aid the company to attain superior competitive position as compared to its main contenders and accomplishing a considerable portion of market share. Financial Implications It is the most vital element, which is needed to be taken into concern in the planning and the execution of any business idea (Bordes, 2009). In relation to the aforementioned business idea, the start-up costs of the company can be estimated as approximately USD 10,000. The aforementioned cost is believed to be sufficient at the initial stage of the implementation of the business idea. As the idea of adding vending machines with the deliverance of quality services would attract the students of the colleges, it is strongly believed that the business would yield a better return after few years of its execution. It can be estimated that after two years of its implementation, the business might yield a better return. It can be affirmed that maximum profits can be acquired after few years of the implementation of any business, as every business plan requires certain time to attain the desired success (Harnrungchalotorn & Phayonlerd, n.d.). Conclusion Based on the above analysis and discussion, it can be affirmed that the business idea of Starbucks i.e. adding vendor machines at public places such as the colleges would yield better return after few years of the execution of the business. Moreover, apart from this, the company can also attain superior competitive position and obtain superior market share through attracting its targeted customers i.e. the college students by providing them with quality products or services. Moreover, Starbucks can also add uniqueness to its brand name as only a few of the retailers can be apparently noted to perform business in colleges or schools. Through the implementation of this idea, Starbucks can capture all age group people, especially the teenage students as its potential customers. Above all, it can be concluded that Starbucks can make its brand identity much stronger in the global market. References Bordes, J., 2009. Strategic Management Assignment. Building and Sustaining Competitive Advantage, pp. 1-29. Chandon, P. & Wansink, B., 2012. Does Food Marketing Need To Make Us Fat? A Review and Solutions. Nutrition Reviews, Vol. 70, No. 10, pp. 571-593. Chester, J. & et. al., 2007. Interactive Food & Beverage Marketing: Targeting Children and Youth in the Digital Age. Setting the Stage, pp. 1-97. Department of Education and Early childhood Development, No Date. Canteen Management. Healthy Canteen Kit – Canteen Manual, pp. 29-44. Goossen, R. J., No Date. Entrepreneurship Expert Jeffry Timmons New Venture Creation. The Entrepreneurial Revolution, pp. 1-19. Harnrungchalotorn, S. & Phayonlerd, Y., No Date. Starbucks with Corporate Social Responsibility (CSR). “How Starbucks Succeeds In A Business World With CSR”, pp. 1-41. Kenneth, C. E., 2007. Integrated Advertising Promotion and Marketing Communication. Pearson Education India. Solis, P. A., 2013. Coffee Lovers, Musicians Pair Up To Fight Cancer. Baylor Lariat, Vol. 1.16, No. 16, pp. 1-6. Starbucks Coffee Company, 2011. Starbucks Company Profile. The Starbucks Story. [Online] Available at: http://globalassets.starbucks.com/assets/ae439315005c447bb93b09f75b60f1ef.pdf [Accessed February 26, 2014].   Starbucks Coffee, 2002. Corporate Social Responsibility. Annual Report, pp. 1-31. Bibliography International Institute of Sustainable Development, 2014. Business Strategies for Sustainable Development. Sustainable Development: A Business Definition. [Online] Available at: http://www.iisd.org/business/pdf/business_strategy.pdf [Accessed February 26, 2014].   Lee, K., No Date. Case Study: Starbucks Coffee. Updated History and Current Status, pp. 1-13. Roby, L., 2011. An Analysis of Starbucks as a Company and an International Business. Starbucks as an International Business, pp. 1-35. White, B. A. & Moraschinelli, E., 2009. The Pursuit of Sustainable Competitive Advantage. A Profile of the Starbucks Corporation, pp. 1-43. Read More